Foreigner's Finances

I want to learn how to play the piano, I want to learn more about different modes of wealth accumulation, I want to learn how to skateboard.

We often want to learn a lot of things, but they are often never accomplished because we either forget about our desires or they fall under the weight of our daily to-do lists.

Investing and saving for retirement is one of these “I want to learn how to do that” topics.

The big difference between learning about investing and learning piano is that 10 lost years of investing can cost you over $100,000 in your lifetime, while 10 lost years of piano playing will probably cost you a little less. You could become a world famous pianist – yes – but even pianists have to keep track of their wealth and plan for the future.

One of my goals last year was to set up a taxable investing account for short-term savings. It took me almost 4 months of procrastination to come to a conclusion – I have too much uncertainity over the next 5 years of my life to be investing in a taxable account.

At least once a day for those 4 months I thought about learning more about taxable investing. I thought about researching funds, brokerages, and figuring out how much I could invest.

A lot of the time I would think about these things, they would make my head hurt, and I would do the easier thing – go to Facebook, check my Google Reader, or check out ESPN for a new Bill Simmons article. All of these things required a lot less thought.

In reality, I was hurting myself and my bottom line by wasting this time. I was potentially losing money every time I closed my Google Finance tab and went over to Twitter.

Since losing days, weeks, months, and years of investing time can cost you a lot of money in missed opportunity, it’s important to force yourself through your procrastination about investing decisions.

So how do we get past the, “ugh, I don’t want to do this today” stage of investing, and actually learn about it?

Here’s 5 tips that’ll help you break through your procrastination:

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Corinne and I spent a refreshing weekend in Nagoya visiting our good friend Hiro who went to school with us in America for about a year.

Over 2.5 days we saw the city, stopped by the ocean (above), ate Subway, made burritos, played Rock Band, toured the infamous Japanese clothing stores, and saw one of our favorite bands – Motion City Soundtrack – in an intimate club with maybe 200 other people. Awesome.

I’m still decompressing from the weekend so I thought it was a fitting time to take a look at some of my favorite posts from the past 2 weeks.

I recently joined a new group of personal finance bloggers in a journey called the Yakezie Challenge. The network of upstart pf blogs helps one another in hopes of raising Alexa scores (blog rank), creating new blog relationships, and introducing one another to new topics/discussions/ways of thinking about money. The group is made up of over 50 blogs and it’s been a pleasure interacting and meeting a solid group of guys and gals so far.

Hopefully, you’ll take some time to check out some of the Yakezie blogs I’ll periodically mention on FF and find something you like.

Here’s 5 of my favorite recent posts from some Yakezie members:

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This is a guest post from Joel who is a Certified Financial Planner™, the owner of 4 different companies, a self professed Internet nerd, and currently working on many different web projects that range from a site for comparing health insurance to a site that helps people backup websites online.

Do you think that you have what it takes to be an entrepreneur? Do you sometimes get the urge to launch out on your own and be your own boss? In fact, do you not just “get the urge” every once in a while to become an entrepreneur but do you find yourself constantly wishing that you were out on your own as your current job just is not fulfilling?

As the owner of 4 different companies and a serial entrepreneur myself it seems that I am only satisfied when I am acting as my own boss and constantly creating any number of new projects that recently include a website for comparing car insurance companies to a website for reading credit card reviews to any other number of web related projects that strike up my interest (and even a BMI calculator website that I am somewhat ashamed to say told me that I am overweight – yes, my own website told me that I need to lose weight!).

Here are 10 statements that you can ask yourself as a true/false question as part of my 100% unscientific officially unofficial “Entrepreneur’s Test”. Let’s see how you do:

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I’ve been talking a lot lately about the importance of educating yourself about money before you start investing and saving for retirement.

Money education shouldn’t follow investing so if you have any interest start today. The benefits of even a little money education will pay-off huge in the long run.

I started learning about money after stumbling upon some personal finance blogs via Lifehacker. I decided to try out some books those sites suggested and I became enamored with the topic.

It sounds ridiculous, but those books opened my eyes to a whole new side of money that I never knew existed.

Here are 5 short reviews of those personal finance books that I read when I first started. I would recommend these books to any one and will always hold them close to my heart for everything they did for my wallet.

I would love to do full reviews, but with a lack of libraries in Japan I’m out of luck.

In the meantime enjoy the 5 micro-reviews!

The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich

The one that started it all. I was a naive 21 year-old and attracted to the “Millionaire” in the title, but the book was surprisingly simple and flipped on a hundred light switches in my head.

Author David Bach introduced me to the paying yourself first – taking a certain percentage of your paycheck – maybe 20-35% – and automatically saving that every time. No excuses, if you do this consistently your money will grow over time and you’ll be thankful you never skipped a paycheck.

This book prompted me to start tracking my money and introduced the idea that people knew how much was going in and out of their accounts – I literally had no idea and never once tracked a penny before this book.

Verdict: A great starter to make you excited about money and the future.

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On Thursday we took a look at why Americans working abroad can’t invest in a Roth IRA and how to avoid double taxation on foreign income.

We learned you don’t have to pay taxes on your income while working abroad. Great! But how do you save for retirement without access to tax-deferred accounts like 401ks and IRAs?

Unfortunately, you’re hands are tied as a foreigner working abroad – at least compared to our friends in America with access to 401ks and IRAs.

You still have the option of investing your money in taxed accounts in America through a broker like Vanguard, Schwab, E*trade, or Zecco but you don’t receive any tax benefits and have to pay taxes on your gains and dividends.

These accounts don’t require you to be in America so you’re more than willing to set one up to start your retirement savings.

Retirement seems far away, but the sooner you start, the easier it is to properly save. Don’t let the absence of tax-efficient accounts scare you away from starting your retirement savings.

A taxable account can be a great start for your money and then when you eventually return home, you can take your progress and continue on with a IRA or 401k.

Here’s what you should know before you invest, and some options if you choose to take the plunge into investing for retirement.

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The following is a guest post by Kevin Fleming. Kevin runs CreditShout, a personal finance blog dedicated to educating people on how to manage their finances and reviewing the best credit cards.

College students who travel abroad often bring credit cards along with them in order to easily facilitate their overseas transactions. If you fit into this category, there are a few things you should consider when traveling internationally with a credit card.

Not only does the type of card you choose to use matter immensely, so does your record-keeping and your pre-planning.

Here’s a quick guide on going abroad with credit.

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The other day I received a question from a reader, Jack, on my 5 Minute Intro to Roth IRAs video post.

Jack asked:

A question for those of us abroad, or rather a request for clarification: I was of the belief that foreign-earned income which qualifies for the foreign-earned income exclusion cannot be used for a Roth IRA. You make no direct reference to this. Can you clarify at all?

Jack is correct. If you are working abroad and have no income in America, you cannot invest in a Roth IRA for the year(s) you are gone.

So why is this?

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Corinne and I have lived together since July and we share a majority of the bills including internet, water, gas, and car insurance. A problem a lot of couples run into when they’re trying to figure out their bills is who should pay for what?

It’s easiest to split the costs 50/50, but if each person has a different income amount this can cause some dreaded relationship tension. One person will have to pay a larger percentage of their paycheck, while the other person will then be able to pocket more cash every month.

After a little research, we realized that paying a percentage of the bills based on our income amounts worked best for our situation.

Here’s an example of the formula we use to split our bills so that no one’s feelings get hurt and every one’s paychecks are treated fairly.

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On Thursday I created a contest to give away 2 premium memberships to the online budgeting tool, Pocketsmith.

Congratulations to the winners, Matt and Daniel from Sweating the Big Stuff!

Thanks to every one for taking part in the contest and I hope to have more giveaways for FF readers soon.

Here are some of my favorite personal finance posts from the last couple weeks:

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I recently had the chance to test drive Pocketsmith – the new budgeting and forecasting web application that allows you to insert bills and predict future cash flow.

The Pocketsmith team have done budgeting right. They’ve created a well-organized, attractive product that helps people not only organize their money, but peer into their future in order to appropriately plan for savings goals.

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